Day Traders Diary

12/23/14

The Dow Jones Industrial Average (+0.4%) and S&P 500 (+0.2%) rallied to new record highs on Tuesday with the Dow crossing above the 18,000 mark for the first time. However, widespread losses in the biotechnology group prevented the Nasdaq Composite (-0.3%) from taking part in the rally.

Equity indices began the day in the green after a better than expected revision to Q3 GDP (5.0%; Briefing.com consensus 4.3%) provided a pre-market boost. The GDP report was a bright spot among a torrent of mostly disappointing data, which was taken in stride by the market.

Nine of ten sectors registered gains with the energy space (+1.3%) ending in the lead. The growth-sensitive sector opened ahead of other groups and held the lead into the close. Crude oil, meanwhile, settled higher by 3.1% at $57.09/bbl and continued its advance in electronic trading with the move taking place even as the Dollar Index (90.13, +0.36) climbed 0.4%.

The energy sector was followed closely by materials (+0.8%) while the remaining cyclical groups also settled ahead of the broader market. Consumer discretionary (+0.6%) and financials (+0.6%) enjoyed broad support while the technology sector (+0.3%) rallied behind its top components like Google (GOOGL 538.77, +6.47), Intel (INTC 37.43, +0.22), and Microsoft (MSFT 48.45, +0.47). The three names gained between 0.6% and 1.2%, but the largest componentApple (AAPL 112.54, -0.40)shed 0.4% and kept the Nasdaq pressured.

However, Nasdaq's woes were not isolated to its largest member. Biotech names retreated across the board with the iShares Nasdaq Biotechnology ETF (IBB 294.70, -14.38) dipping below its 50-day average (294.47). The biotech ETF was able to reclaim that level ahead of the close, but still ended the day lower by 4.7%. For its part, the health care sector (-2.2%) was the only group that ended behind the S&P 500.

The underperformance of biotechnology prevented the S&P 500 from extending its gain, while the price-weighted Dow Jones Industrial Average benefitted from containing just four health care names with two of the four priced below $60/share. In total, only five Dow components registered losses while the two largest listingsVisa (V 265.26, +1.05) and Goldman Sachs (GS 195.50, +1.06) gained 0.4% and 0.6%, respectively. Today's outperformance extended the Dow's year-to-date gain to 8.7%, but the index remains behind the S&P 500, which has added 12.7% so far in 2014.

Elsewhere among Dow members, shares of Coca-Cola (KO 42.97, +0.62) gained 1.5% after The Wall Street Journal reported the company plans to cut between 1,000 and 2,000 jobs globally. As for the broader consumer staples sector (+0.8%), the countercyclical group ended among the leaders.

Treasuries ended near their lows with the 10-yr yield spiking ten basis points to 2.26%.

Today's participation was below average with fewer than 700 million shares changing hands at the NYSE floor.

Economic data was plentiful, including GDP, Durable Orders, FHFA Housing Price Index, Michigan Sentiment, Personal Income/Spending, and New Home Sales:

Third quarter GDP was revised up to 5.0% in the third estimate after an originally reported 3.9% gain, which was the largest increase since a 6.9% spike in Q3 2003
The Briefing.com consensus expected GDP to be revised up to 4.3%
Real final sales were revised up to 5.0% from 4.1%, which was the largest increase since Q1 2006 when sales climbed 5.5%
Consumption was revised up to 3.2% from 2.2% after increasing 2.5% in Q2 2014
Durable goods orders declined 0.7% in November after increasing a downwardly revised 0.3% (from 0.4%) in October
The Briefing.com consensus expected an increase of 2.7%
A large portion of the miss was a result of seasonal adjustments impacting nondefense aircraft orders
Excluding transportation, durable goods orders declined 0.4% while the consensus expected an increase of 1.0%
The October Housing Price Index from the FHFA rose 0.6%, which followed an unchanged reading in September
New home sales in November hit an annualized rate of 438,000, which was down from the revised October rate of 445,000 (from 458,000) and worse than the rate of 460,000 that had been broadly expected by the Briefing.com consensus
The University of Michigan Consumer Sentiment Index was virtually unchanged at 93.6 (from 93.8) in the final December reading while the Briefing.com consensus expected no change
The December sentiment reading marked the highest point since January 2007
Personal income increased 0.4% in November while the Briefing.com consensus expected an increase of 0.5%
Personal spending increased 0.6% in November while the consensus expected an increase of 0.5%
Core PCE prices were flat in November while the consensus expected an uptick of 0.1%
There is no economic data on tomorrow's schedule with the session scheduled to end early at 13:00 ET.

Nasdaq Composite +14.1% YTD
S&P 500 +12.7% YTD
Dow Jones Industrial Average +8.7% YTD
Russell 2000 +3.4% YTD